Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Felix Salmon » Blog Archive » Annals of unncessary foreclosure fees, Harlem edition | Blogs |

Annals of unncessary foreclosure fees, Harlem edition

Posted by: Felix Salmon
Tags: housing

Three cheers for Justice Emily Jane Goodman, who threw out a ridiculous foreclosure case that was brought by Washington Mutual against Imar Hutchins, a man who made repeated attempts to make his mortgage payments, all of them rejected by the bank, which then served a foreclosure notice on one of his renters.

It’s unclear why Hutchins had this particular mortgage in the first place: he took it out the $470,000 loan in May 2006, and then in May 2008 missed a single mortgage payment of $3,730. He had a lot of positive equity in the building: the price was $675,000, which means that his downpayment of over $200,000 was more than 30% of the purchase price. Yet even then, within two years of getting the mortgage, his mortgage rate was already at about 9%.

But the fact that WaMu insisted on initiating foreclosure proceedings after a single missed payment is still revealing. Hutchins, with his $200,000 of positive equity, was no deadbeat jingle-mailer. But the fees that a servicer gets from foreclosure proceedings are high, and the costs fall overwhelmingly on the homeowner. Maybe the fact that he had such a high-interest-rate mortgage served as some kind of signal to the bank that they should try to rip him off even more by tacking on unnecessary foreclosure fees.

A mortgage isn’t a credit card: you shouldn’t be slapped with fees and lawsuits just for missing a single payment. But maybe, for mortgages taken out at the height of the boom in mid-2006, that’s exactly where banks like WaMu thought they were going to make their money. If true, that’s utterly depressing.

One comment so far

How is this WaMu’s fault? Isn’t Chase the one to blame–as the successor? WaMu does not exist except as shell holding company.

- Posted by Bagley

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Exactly what happened to me.  One payment late.  They are after the equity, not just the fees.

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